Per Capita Income Confusion for Counties

One of the most commonly used economic indicators for local economies—per
capita income—can cause considerable confusion among users. Why?
Because there is more than one set of figures and they aren't the same
nor are they issued by the same federal agency.

The two most commonly used are per capita money income and per capita
personal income. Usually the figure is simply referred to as per capita
or per capita income, and therein begins the confusion. Add to that the
generally held notion that the Census produces all data, and we have added
more confusion.

Per capita personal income is derived from total personal income, which
is generally considered the more comprehensive measure. This can be seen
directly in the county map showing the dollar difference between the Census
2000 measure and the 2000 annual estimate from BEA (see Figure 1).

The BEA estimate is higher in all 92 counties, and considerably higher
by thousands of dollars in some (particularly Boone and Dubois counties).
The differences in the way each of these measures—the one annual
from the BEA and the other every ten years from the Census Bureau—also
effects the relative rankings of the counties. Careful reading of the
following agencies' definitions will help clarify these differences.

Per Capita Personal Income (PCPI)

Source: U.S. Bureau of Economic Analysis

Frequency: Annual for counties; quarterly for the states and the
U.S.

Time series: 1929 forward for U.S. and states; 1969 forward for counties
and MSAs

The sum of wage and salary disbursements and other labor income;
proprietors' income with inventory and capital consumption adjustments;
rental income of persons with capital consumption adjustment; personal
dividend income; personal interest income; and transfer payments to
persons, less personal contributions for social insurance. These measures
include incomes of individuals, nonprofit institutions that primarily
serve individuals, private noninsured welfare funds and private trust
funds. Proprietors' income is treated in its entirety as received by
individuals. Life insurance carriers and noninsured pension plans are
not counted as persons, but their income and savings are credited to
persons.

Per Capita Income

Source: U.S. Census Bureau

Frequency: Every 10 years

Time series: Every Census since 1790

Consists of cash and its equivalents received by individuals. It is the
sum of the amounts reported separately for wage or salary income; net self-employment
income; interest, dividends, or net rental or royalty income or income from
estates and trusts; social security or railroad retirement income; Supplemental
Security Income (SSI); public assistance or welfare payments; retirement,
survivor or disability pensions; and all other income. It excludes: capital
gains, money received from the sale of property (unless the recipient was
engaged in the business of selling such property); the value of income in
kind from food stamps, public housing subsidies, medical care, employer contributions
for individuals, withdrawal of bank deposits; money borrowed; tax refunds;
exchange of money between relatives living in the same household; and gifts
and lump-sum inheritances, insurance payments and other types of lump-sum
receipts.

Carol O. Rogers
Associate Director, Indiana Business Research Center,
Kelley School of Business, Indiana University